The housing crisis
18 May 2015
Bill Hughes, Head of Real Assets, for Legal & General tells us how the business is getting involved in helping to provide a solution to the housing crisis.
Addressing Britain’s housing supply crisis is one of the single most important priorities facing the UK today. For decades, Britain has failed to build anywhere near enough homes to meet its growing population. Consequences range from unaffordability of housing and social immobility, to increasing inefficiency of our cities. As so it is not surprising that housing has become a key theme that features in all of the manifestos of the main political parties – with all three promising to ensure that between 200,000 and 300,000 homes a year get built over the next government term, should they be elected.
So what can be done to get Britain building homes, and what is our role in all of this? As one of the largest UK property investors, with the in-house skills to manage complex development projects andmulti-faceted regeneration, our property team is working hard to originate and deliver good quality, cost effective housing schemes across all forms of tenure. And housing is rapidly becoming a more important element of what we do as investors in the built environment. In practice, this means working closely with Central Government, Local Authorities, house builders, developers, social housing providers, charities and other specialist organisations to source opportunities. And along the way we are looking to overcome issues around access to land, planning and viability, as well as making sure we deliver buildings of quality.
Every month, I have top level conversations with all possible influencers of the housing market, from across both the public and the private sector. There is a growing awareness that with the retrenchment of the banks, and a government that remain cash strapped, the role of the private sector will inevitably become more important. And with significant and increasing volumes of patient long-term capital under management, as a pension provider we have the opportunity to play a meaningful role in finding a workable solution. Indeed, for communities to grow in a sustainable way over the long term, there a compelling logic for the investment capital in the sector also being long-term in nature, with the desire to invest in bricks and mortar with enduring value.
Our appetite to do more is there and the real key is to successfully team up with the right partners to deliver the right projects. We always prioritise our fiduciary responsibility to maximise pensioners’ returns, and so we have a preference to work with those that adopt like-minded long term, strategic approaches, and look to create assets that will stand the test of time.
When we talk about housing or the residential market, in reality this incorporates an enormously varied universe. I oversee a team that is looking to cater for all types of home ownership, in order to help provide the UK's population with high quality, affordable living at all stages in their life cycle. Our backing for a fast growing pipeline of nearly 50,000 new homes means we believe that no one area of the market will alone solve the housing crisis. But each can and will play an important part. This means that current activities we are involved in range from the funding of large scale, modern, university-backed student accommodation and education campuses, to new build-to-rent private rented sector buildings, to homes for senior living that provide for an ageing population.
There is a mountain to climb in terms of the supply of new housing that is required in the UK. But as one of the UK’s largest investors we are looking to be brave and ambitious, and consider that we have an obligation to address this challenge. So we are looking to create new solutions in how we build and manage residential buildings, in an attempt to promote better standards across our industry. Ultimately, the goal is to invest the capital that we look after on behalf of UK's long-term pensioners and savers back into the real assets of the UK, in such a way as to deliver strong returns at the same time as improving the built environment. Exciting times, but so much to do!